On October 5, the think tank Atlantic Council published an analytical report by the Dossier Center run by Mikhail Khodorkovsky titled “Lubyanka Federation: How the FSB determines the politics and economics of Russia”. This article will be based on the said report.
With 2024 approaching, discussions have renewed about whether power in Russia consists of several Kremlin towers or is it just one main tower with many wardens and a star at the top. Despite Vladimir Putin once promising that he will not amend the constitution so he could increase his number of terms as president, in the end he did it. Cosmonaut and State Duma Deputy Valentina Tereshkova felt the Soviet breath (mixed with other earlier historic events) on her skin which urged her to reset Putin’s presidential terms. Putin then ran to the Duma and said: “Yes, we can do it, but the Constitutional Court has to deem it legal.’
Of course, the court deemed it legal – that is what it is for. Whether Putin will remain in Olympus is not entirely clear (there are rumors circulating regarding his bad health), but we cannot call Putin a “lame duck” yet. Putin has established a system of power that will be able to exist even after his departure, but only if all the engaged parties agree on a new arbiter. What is the role of the Russian Federal Security Service (FSB) in this system? We will not look at the FSB’s functions and tasks as stipulated in the law, but instead focus on the “side functions” of the service along with its informal role in government processes.
From KGB to FSB
FSB is becoming increasingly similar to its predecessor, the KGB, but there are differences between both organizations because there are differences between Putin’s system and the Soviet system. The FSB attempts to preserve the president’s personal power, not the Soviet power and the ideals of communism. If Soviet chekists engaged in mass repressions, then the FSB carries out targeted individual repressions. Unlike the KGB, modern intelligence officers can interfere in the economy and amass great wealth. The communists forbade private property and entrepreneurship, except for illegal activities of some factory directors who established unofficial production within state companies and embezzled the profits.
The Kremlin-controlled capitalism provides new opportunities for the FSB to offer “protective” services to entrepreneurs. However, during Putin’s rule FSB officers did not shy away from their KGB heritage and made the FSB a true heir to the Cheka. Monuments to the founder of the Cheka Felix Dzerzhinsky are still being erected near the FSB’s regional departments. In the first months after the collapse of the USSR, the highest posts in the new Russian Federation were occupied by officers of the KGB and the Ministry of the Interior (MoI) who then had time to prove their loyalty to the president. And a lot of them kept their Soviet encirclement mentality: “Russia is surrounded by enemies!” The researchers at Dossier noted that from 1991 to 2003 the FSB saw three stages of development: commercialization, criminalization and emancipation.
Commercialization of the service
One of the prerequisites of the FSB’s commercialization and criminalization (which happened almost simultaneously) were the identity issues of security institutions. In the second half of the eighties and early nineties, the political changes brought upon the “de-ideologization” of the service and not everyone was ready for it. Some of the officers decided to switch to protecting the Orthodox Russia, but not all of them were Orthodox Christians. In the early nineties, the salaries of the officers were small, so a large part of them decided to use their power for their own personal benefit – alongside their main duties, employees of special services began looking for sources of additional income. Newly established private companies desperately needed protection from racketeering which flourished during the fierce post-Soviet capitalism in which the rule of the law was far from being adequate. Employees of the FSB engaged in corrupt schemes, including organizing illegal financial transactions, especially in the banking sphere. The report by Dossier argues that “the FSB is directly controlling almost every single illegal banking operation in Russia, and this brings huge profits to particular FSB employee groups and their “clan” members.”1
An important change during the nineties was the establishment of the FSB’s Economic Security Department that allowed greater possibilities of interfering in financial and entrepreneurial matters. The first loud scandal that revealed to the public that the FSB is interfering in business happened in 2000 with the case of the “Three Whales”. Several FSB officers of the highest rank who had close ties with Putin were caught importing furniture from China without paying customs duties. The president himself engaged and none of the main suspects received a punishment. Several officials were forced to resign because of the scandal, but the accused men could freely continue their careers in state and private spheres. The conclusion of the case pointed to a new reality – the FSB had become untouchable.
FSB officers, who were responsible for security issues pertaining to organized crime, used their work duties as a pretext to communicate with members of organized crime. But they did this to benefit themselves, not the state. The alliance of criminals and law enforcement officials in St. Petersburg had particularly far-reaching consequences for all of Russia. The Dossier report states that officers of the FSB’s branch in St. Petersburg together with bureaucrats and criminal authorities established a long-lasting criminal coalition that resulted in systemic corruption with international ties. This resembled the finest examples of the Italian mafia.
Vladimir Putin, being a local government official of St. Petersburg, was the man who linked the three branches of this coalition – the city officials, the local FSB and the criminals. In 1998, when Putin was appointed the head of the FSB, he replaced the highest leadership of the service with his acquaintances from St. Petersburg. Members of Putin’s circle began moving from the “Northern Capital” to Moscow where they began occupying governmental and entrepreneurial posts. When Putin became president, the FSB’s role in the system of power increased and organized crime groups were presented with new opportunities in Russia.
Emancipation was when the FSB got rid of democratic control, and this happened when Putin reinforced authoritarian rule in the country. The main structural changes since the late nineties corresponded to this trend – the FSB saw the establishment of new departments and the expansion of existing ones that could control other law enforcement authorities – the prosecutor’s office, Investigative Committee, MoI, customs authorities, Federal Protective Service, etc. In 1999, the FSB was involved in the sacking of Prosecutor General Yuri Skuratov who had been investigating possible violations by daughter of Boris Yeltsin Tatyana Dyachenko and deputy prime ministers Anatoly Chubais and Valery Serov. This was the first time the FSB engaged on such scale in the infighting among the elites. And this is where Putin showed loyalty not to the rule of law, but to the Yeltsin family.
Everything began in 1998, when Skuratov began investigating hundreds of government officials who were suspected of abusing their power to make profits in the short-term bond market. Skuratov believed that among these officials were also Chubais, Serov and Dyachenko. In the same year, Skuratov filed an action against the Yeltsin administration stating that an official within the administration has received a bribe of roughly 60 million dollars for granting lucrative construction contracts. Some months later, a video was aired on public TV depicting a “person resembling Skuratov” having fun with prostitutes. The FSB launched a criminal case against the prosecutor general on the grounds of abusing power, and Skuratov was dismissed. Skuratov later wrote that Putin, then the head of the FSB, was forcing him to resign. The FSB also won its battle with the MoI. As a result, the MoI’s Organized Crime Department was marginalized in early 2000 and completely abolished in 2008.
Russia – “shadow state”
One of the main principles of a democratic government is civil oversight of power structures. Firstly, the FSB is subordinate only to Putin whose power is personalized. Secondly, the FSB’s influence in politics and the economy far exceed its constitutional authority. The FSB is able to influence the decisions of other state institutions, but at the same not take any responsibility for these decisions. Russian authorities are not operating fully, and instead there is the “shadow state” – a system of informal rules that are known to its members. There is a risk that after Putin’s departure the system may shake-up, as it can only function if the arbiter is sitting in the Kremlin.
The Russian president shares his power with those among his inner circle, and these people are also establishing their own system of power in close conjunction with the FSB. Among them are Secretary of the Security Council Nikolay Patrushev, Executive Director of Rosneft Igor Sechin, Executive Director of Rostec Sergey Chemezov, Head of Gazprom Viktor Zubkov and former minister of defense Sergey Ivanov. In 2004 and 2005, Igor Sechin, who in the real hierarchy of power is very close to Putin, established the FSB’s 6th Internal Security Department (also known as Sechin’s spetsnaz). One of the aims of the new department was to get rid of the MoI’s Organized Crime Department, which in the mid-nineties was responsible for numerous detainments of FSB officers. The 6th Department is also responsible for witness protection, and this is being used both for legitimate aims, as well as to exert control over the FSB’s opponents. Businessmen are willing to pay huge sums for the services of the 6th Department. For instance, banker Yevgeny Dvoskin, who helped criminals and corrupt officials to launder money, was under the FSB’s protection. When in 2007 the MoI’s forces attempted to arrest him, FSB officers using an emergency medical services vehicle helped him to escape and avoid arrest.
In Putin’s system of power, a crucial role is played by the FSB – an organization that with the help of the president has overtaken the entire law enforcement system. The FSB itself answers only to the president, the director of the FSB and his subordinates. Such a system can only exist in an authoritarian state. The authors of the Dossier report note that this system is bringing the historic development of Russia into a dead end, because it is only possible to govern a state with the help of loyal security officials until the guarantor of such a system is alive. When the leader dies, the fragmented clans will scramble for power, and this is a situation that will be difficult to solve in a peaceful way.
Considering its crucial role, the FSB has become a battlefield for power and resources. Different economic groups have their own lobbies in the FSB. In a democratic society, political conflicts are solved among parties, using legislation and in lobby groups, while financial issues are resolved in court. However, in modern Russia these conflicts take the shape of clans fighting for power over and within the FSB.
The FSB’s engagement in economic processes hinders the development of a competitive economy, and this is bad for the end users – the regular citizens who do not receive the best they could. Without healthy competition, resources often end up in the hands of those unable to make decisions that would be based on rationality and competence and which would benefit the state because these people are operating in their own interests. According to Dossier, the combination of these factors has resulted in the decline and stagnation of all spheres of Russia’s public life.
*Konstantin Zigar is a Polish journalist and graduated from the Lomonosov Moscow State University as an historian.
1 Lubyanka federation: How the FSB determines the politics and economics of Russia.
Report by The Dossier Center. Atlantic Council, 05.10.2020, https://www.atlanticcouncil.org/in-depth-research-reports/report/lubyanka-federation/